Mississippi Insurance Guaranty Association v. Bridgette Blakeney
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IN THE SUPREME COURT OF MISSISSIPPI
NO. 2008-CT-01840-SCT
MISSISSIPPI INSURANCE GUARANTY
ASSOCIATION
v.
BRIDGETTE BLAKENEY
ON WRIT OF CERTIORARI
DATE OF JUDGMENT:
TRIAL JUDGE:
COURT FROM WHICH APPEALED:
ATTORNEY FOR APPELLANT:
ATTORNEYS FOR APPELLEE:
NATURE OF THE CASE:
DISPOSITION:
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
10/27/2008
HON. BILLY JOE LANDRUM
JONES COUNTY CIRCUIT COURT
CLIFFORD C. WHITNEY, III
S. WAYNE EASTERLING
JOHN RAYMOND TULLOS
CIVIL - WORKERS’ COMPENSATION
REVERSED AND RENDERED - 01/13/2011
EN BANC.
DICKINSON, JUSTICE, FOR THE COURT:
¶1.
When the workers’ compensation carrier making payments to Bridgette Blakeney was
declared insolvent, its claims were transferred to the Mississippi Insurance Guaranty
Association (MIGA),1 which, upon discovering Blakeney had received a settlement of
$60,000 from her employer’s uninsured motorist (UM) carrier,2 petitioned the Workers’
1
MIGA was established by the Legislature to assume limited claim responsibility for the
claims of insolvent insurance companies. See generally Miss. Code Ann. §§ 83-23-1 to 83-25-235
(Rev. 1999).
2
A UM carrier is an insurance company providing coverage for the negligence of an
uninsured motorist. See generally Miss. Code Ann. §§ 83-11-101 to 83-11-111 (Rev. 1999).
Compensation Commission (“Commission”) for an offset of $100,000 – the full UM policy
limits. The workers’ compensation administrative law judge (ALJ) found MIGA’s credit was
limited to the $60,000 actually paid, but the full Commission noted that MIGA stood in the
shoes of a compensation carrier, relied on caselaw that exempts UM benefits from a
compensation carrier’s subrogation rights, and held that MIGA was entitled to no credit. The
circuit court and the Court of Appeals affirmed the Commission, but we reverse, finding that
MIGA must comply with a statute that requires it to offset the $60,000 actually paid.
BACKGROUND
¶2.
After she was injured in an automobile accident, Blakeney collected the $10,000
policy limits of the other driver’s liability policy, settled for $60,000 of the $100,000 policy
limits of her employer’s UM policy, and because the accident was work-related, began
receiving workers’ compensation (“comp”) benefits from her employer’s comp carrier,
Coregis Insurance Company. After Coregis was declared insolvent, its claims, including
Blakeney’s, were assumed by MIGA.
¶3.
After it started paying Blakeney’s comp benefits, MIGA learned of the $70,000 she
had collected from the two insurance companies, prompting it to petition the Commission
to allow it to suspend paying her benefits until her accrued claims exceeded the $70,000 she
already had collected. Upon reflection, MIGA amended its petition, claiming that, rather
than the $70,000 the two insurance companies had paid, it actually was entitled to a credit
of $110,000 – their combined policy limits.
¶4.
The ALJ held that, rather than a credit for the full policy limits, MIGA was entitled
to offset the $70,000 actually paid, but the full Commission reversed, holding that MIGA was
2
entitled to full credit for the $10,000 paid by the liability policy (less $4,000 in collection
costs), but it was not entitled to any credit for the UM policy. Both the circuit court and
Court of Appeals 3 affirmed the Commission’s order, and we granted MIGA’s petition for
certiorari.
ANALYSIS
¶5.
Because most Commission decisions are fact-based, the appellate standard of review
for those decisions is deferential.4 But when the essential facts are undisputed and the issues
presented turn on legal questions, we must apply our own interpretation of the law.5
I.
MIGA was created by the Legislature, and its responsibilities are
controlled by statute.
¶6.
An insurance policy is a contract with an insurance company, whose duty to pay
claims ordinarily is contractual. But when the insurance company becomes insolvent, its
policyholders face a substantial risk that their legitimate claims will be delayed or not paid
at all. To address this problem, the Legislature enacted the Mississippi Insurance Guaranty
Association Law (the “MIGA Act”), creating MIGA.6
3
Miss. Ins. Guar. Ass’n v. Blakeney, 2009 WL 4592356, at *1 (Miss. Ct. App. Dec. 8,
2009).
4
Total Transp., Inc. of Miss. v. Shores, 968 So. 2d 400, 404 (Miss. 2007) (citing Smith v.
Jackson Constr. Co., 607 So. 2d 1119, 1124 (Miss. 1992); Georgia Pac. Corp. v. Taplin, 586 So.
2d 823, 826 (Miss. 1991)) (internal citations omitted).
5
KLLM, Inc. v. Fowler, 589 So. 2d 670, 675 (Miss. 1991).
6
Miss. Code Ann. § 83-23-103 (Rev. 1999) (“The purpose of [MIGA] is to provide a
mechanism for the payment of covered claims under certain insurance policies to avoid excessive
delay in payment and to avoid financial loss to claimants or policyholders because of the insolvency
of an insurer. . . .”).
3
¶7.
MIGA’s statutory purpose is to “cover claimants who would otherwise not be fully
compensated as a result of the insolvency of an insurer.” 7 As noted by the Commission and
the Court of Appeals, the MIGA Act provides that MIGA shall be
deemed the insurer to the extent of the obligation on the covered claims and
to such extent shall have all rights, duties, and obligations of the insolvent
insurer as if the insurer had not become insolvent.8
¶8.
This “deemed the insurer” language has produced the aphorism: “MIGA stands in the
shoes of an insolvent insurer.” 9 But an insolvent insurer’s shoes are not always a perfect fit.
Just as surely as the insolvent insurer’s “duties and obligations” pass to MIGA under one
subsection of the statute, they are limited under another subsection that says MIGA may pay
covered claims only “to the extent of the association’s obligation.” 10
¶9.
The “association’s obligation” often does not equal the insolvent insurer’s obligations
under the policy.
For instance, MIGA is statutorily prohibited from paying punitive
damages,11 and its authority to pay claims is limited to claims of Mississippi residents, or
concerning Mississippi property.12 And regardless of the limits of the underlying policy,
MIGA’s liability for most claims is capped at $300,000.13
7
Nat’l Union Fire Ins. Co. v. Miss. Ins. Guar. Ass’n, 990 So. 2d 174, 181 (Miss. 2008).
8
Bobby Kitchens, Inc. v. Miss. Ins. Guar. Ass’n, 560 So. 2d 129, 135 (Miss. 1989).
9
See, e.g., Nat’l Union Fire, 990 So. 2d at 177; Miss. Ins. Guar. Ass’n v. Byars, 614 So.
2d 959, 964 (Miss. 1993); Bobby Kitchens, 560 So. 2d 129, 135 (Miss. 1989).
10
Miss. Code Ann. § 83-23-115(1)(d) (Rev. 1999).
11
Miss. Code Ann. § 83-23-109(f) (Rev. 1999).
12
Id.
13
Miss. Code Ann. § 83-23-115(1)(a)(iii) (Rev. 1999).
4
¶10.
MIGA’s duty and authority to pay claims – including Blakeney’s – must be filtered
through these, and all other MIGA Act limitations, and we must respect and apply those
limitations, even where they would not have applied to the insurance company.14 We now
turn to the statutory limitation most pertinent to this case.
II.
The MIGA Act’s exhaustion provision requires MIGA to offset
Blakeney’s UM benefits.
¶11.
The MIGA Act states:
Any person having a claim against an insurer under any provision in an
insurance policy other than a policy of an insolvent insurer, which is also a
covered claim, shall be required to exhaust first his right under such policy.
Any amount payable on a covered claim under this article shall be reduced by
the amount of any recovery under such insurance policy.15
¶12.
This statute – often called MIGA’s “exhaustion provision” – seems clear enough:
“Any person having a claim against an insurer under any provision in an insurance policy
other than a policy of an insolvent insurer, which is also a covered claim” defines the
policyholders to whom the statute applies; “shall be required to exhaust first his right under
such policy” defines the policyholder’s duty; and “Any amount payable on a covered claim
under this article shall be reduced by the amount of any recovery under such insurance
policy” establishes MIGA’s duty when the statute applies.
¶13.
Applying the statute to the facts of this case: Blakeney had a claim against her
employer’s solvent UM carrier for the same loss (the damages she suffered from the
automobile accident) being paid by MIGA; she was required to “exhaust” her right under the
14
Byars, 614 So. 2d at 963 (internal citations omitted).
15
Miss. Code Ann. § 83-23-123(1) (Rev. 1999).
5
UM policy – which she did by settling for $60,000 and signing a release; and MIGA was
required to reduce its “amount payable” on Blakeney’s claim “by the amount of [Blakeney’s]
recovery” under the UM policy which, as correctly concluded by the ALJ, was the $60,000
actually recovered, not the $100,000 policy limits demanded by MIGA.
¶14.
The dissent proposes an interesting interpretation of the statute, one which would
require the claim against the solvent insurer to meet the statutory definition of “covered
claim” 16 – a requirement that would be difficult to meet, since MIGA’s “covered claims”
come only from insolvent insurers. We decline to adopt such a reading, because it is plainly
contradicted by the statute. By definition, a “covered claim” can be only a claim against an
“insolvent insurer.” 17 It is therefore impossible for the claim against the solvent insurer to
meet the statutory definition of “covered claim,” which requires that the insurer be insolvent.
The statute’s clear meaning is that MIGA may reduce its obligation to pay a “covered claim”
(which must have come from an insolvent insurer) where the beneficiary recovers on the
same claim from a solvent insurer. Here, the “claim” is for injuries and lost wages caused
by an accident; so the claim against the workers’ compensation carrier (for reimbursement
of those losses) was the same legal claim as the one against the UM carrier. Our reading and
conclusion today is in complete harmony with our prior holding in Leitch v. Mississippi
Insurance Guaranty Association.18
16
Diss. Op. ¶ 32.
17
Miss. Code Ann. § 83-23-109(f).
18
Leitch v. Miss. Ins. Guar. Ass’n, 27 So. 3d 396 (Miss. 2010).
6
III.
The MIGA Act has no exceptions for UM policies, workers’ compensation
policies, or the Workers’ Compensation Law.
¶15.
The question of whether UM benefits are off limits to MIGA was answered in Leitch,
decided in 2010, in which MIGA assumed the claims of Reliance Insurance Company, the
tortfeasor’s insolvent liability carrier.19 MIGA paid Leitch under the liability policy, and then
asserted it was entitled to an offset for Leitch’s UM benefits.20 Leitch argued that his UM
benefits did not reduce MIGA’s obligation to pay Reliance’s claims.21 We held that MIGA
was entitled to the offset because the MIGA Act included no exemption for UM coverage.22
¶16.
In appealing the ALJ’s decision to the full Commission, Blakeney successfully argued
that Leitch was distinguishable because, in her case, MIGA stood in the shoes of a comp
carrier, bringing into play the Workers’ Compensation Law’s subrogation provision, which
says:
The commencement of an action by an employee . . . against a third party for
damages by reason of the injury . . . shall not affect the right of the employee
. . . to recover compensation, but any amount recovered by the injured
employee . . . from a third party shall be applied as follows: reasonable costs
of collection as approved and allowed . . . by the commission . . . shall be
deducted; the remainder . . . shall be used to discharge the legal liability of the
. . . insurer . . . .23
¶17.
The Commission found that MIGA was not entitled to any credit under the UM
policy, citing as its authority our decision in Cossitt v. Nationwide Mutual Insurance Co.,
19
Id.
20
Id.
21
Id.
22
Id. at 401.
23
Miss. Code Ann. § 71-3-71 (Rev. 2000) (emphasis added).
7
in which we held that, although Section 71-3-71 does allow comp carriers to subrogate
against liable third parties, it does not allow them to subrogate against UM carriers, who are
not liable “third parties” within the meaning of the subrogation provision.24 We find no
connection between a comp carrier’s Section 71-3-71 subrogation rights and the MIGA Act’s
exhaustion provision.
¶18.
Section 71-3-71 allows comp carriers to pursue and recover from liable third parties
and, as acknowledged by the Commission, UM carriers are not “third parties” under that
statute (thus, our holding in Cossitt). So while we agree that MIGA has no authority under
Section 71-3-71 to take an offset for UM benefits, we cannot agree that the Legislature is
precluded from granting that authority under another statute – which we find it clearly did
under Section 83-23-123(1).
¶19.
In its order, the Commission stated:
We do not for a second deny that MIGA, under § 83-23-123(1) is entitled to
have “any amount payable [by it to Blakeney] on a covered claim under this
article . . . reduced by the amount of any recovery” which Blakeney obtains
from a liable third party.
(Emphasis added.) It appears the Commission reached its mistaken conclusion by ending its
quote too quickly, and completing the sentence using its own language. The statute actually
says – and the Commission’s order should have said: “any amount payable [by it to
Blakeney] on a covered claim under this article . . . reduced by the amount of any recovery
under such insurance policy.” 25
24
Cossitt v. Nationwide Mut. Ins. Co., 551 So. 2d 879, 887 (Miss. 1989).
25
Miss. Code Ann. § 83-23-123(1) (Rev. 1999).
8
¶20.
The Commission’s redraft of the statute changed its meaning in several important
ways:
"
By removing the phrase “insurance policy,” the Commission effectively
removed UM policies, which, according to Leitch, are fair game for
MIGA.
"
By writing in the phrase “a liable third party,” the Commission brought
into play Cossitt’s exclusion of UM carriers and their policies from
workers’ comp subrogation.
Then, having transformed the meaning of the statute, the Commission used it to reach three
erroneous conclusions:
"
"
“MIGA may, under Section 83-23-123(1), effectively reduce the
amount of workers’ compensation benefits payable to Blakeney by the
‘net proceeds,’ under Section 71-3-71, recovered by Blakeney in her
third party claim.”
"
¶21.
“[T]he amount by which MIGA may effectively reduce the amount it
has paid in workers’ compensation benefits necessarily must be
determined by reference to Section 71-3-71. . . .”
“[U]nquestionably, under Section 71-3-71, MIGA has no claim to the
uninsured motorist benefits . . . since the Employer’s own uninsured
motorist carrier is not a ‘third party’ within the meaning of the statute.”
While we agree that a UM carrier “is not a ‘third party’ within the meaning of the
[workers’ compensation] statute,” it unquestionably is an “insurer” within the meaning of the
MIGA statute. In essence, by changing the statute’s language to label UM carriers as “third
parties,” the Commission brought MIGA’s exhaustion provision under the purview of
Section 71-3-71 – a statute that allows comp carriers to recover their payments from third 26
parties. Then, the Commission cited Cossitt for the proposition that UM carriers are not third
26
Miss. Code Ann. § 71-3-71 (Rev. 2000).
9
parties for purposes of workers’ comp subrogation, thereby insulating from MIGA Coregis’
$60,000 payment to Blakeney.
¶22.
We find that the Commission’s interpretation and application of Section 83-23-123(1)
was clearly erroneous; Section 71-3-71 is not applicable to the calculation of MIGA’s credit
under Section 83-23-123(1); and when MIGA assumes the claims of a comp carrier, Section
71-3-71 does not deprive it of credit for payments made by UM carriers.
IV.
MIGA is not entitled to credit for the full $100,000 policy limits, but is
entitled to credit for the $60,000 actually paid.
¶23.
MIGA argues that, even though Blakeney settled with the UM carrier for $60,000, it
nevertheless is entitled to credit for the entire $100,000 policy limits. MIGA concedes there
is no Mississippi authority on point, but cites the decisions of other states interpreting
guaranty association statutes similar to Mississippi’s. We decline to follow the guidance of
other state’s decisions because our statute is clear and unambiguous.
¶24.
Blakeney settled with the UM carrier for $60,000, and we find no evidence or
suggestion that the settlement involved fraud or bad faith. Applying Section 83-23-123(1)27
to these undisputed facts, our resolution of this issue is clear:
[Blakeney,] having a claim against [the UM policy] which [was] also [a claim
covered by MIGA], [was required to, and did] exhaust first [her] right under
[the UM] policy. Any amount payable [by MIGA] . . . shall be reduced by the
amount of any recovery [$60,000] under [the UM policy].
¶25.
In crafting this statute, the Legislature selected the word “recovery” – a word bristling
with clarity, void of ambiguity, and, for our purposes, easily applied. Recovery, in the
27
Miss. Code Ann. § 83-23-123 (Rev. 1999).
10
context of the statute and this case, means Blakeney’s recovery. We find no merit in
MIGA’s argument on this issue.
V.
When MIGA applies credit under Section 83-23-123(1) to its amount
payable, it may not deduct collection costs under Section 71-3-71.
¶26.
The Commission held that MIGA was entitled to credit for the $10,000 liability policy
under Section 83-23-123(1), filtered through Section 71-3-71's cost-deduction provision,
resulting in “net proceeds” to MIGA of $6,000.
Although MIGA does contest the
Commission’s use of Section 71-3-71 to deduct costs, neither MIGA nor Blakeney
challenges or briefs the Commission’s determination that Section 83-23-123(1) is the source
of MIGA’s claim and entitlement to the liability policy proceeds. Without analyzing the
correctness of the Commission’s conclusion on this point, we shall accept it as true.
¶27.
When a comp carrier exercises its subrogation rights under the workers’ comp
statutes, the following language from that statute comes into play: “any amount recovered
by the injured employee . . . from a third party shall be applied as follows: reasonable costs
of collection as approved and allowed . . . by the commission . . . shall be deducted. . . .” 28
This subrogation statute clearly allows the Commission to award costs.
¶28.
Had MIGA pursued the liability policy proceeds under the subrogation statute, the
Commission would have been justified in deducting costs under the provision. But as noted
earlier, the Commission, MIGA, and Blakeney agree that MIGA’s claim is properly analyzed
under Section 83-23-123(1), which has no cost-reduction provision.29 And other than the
28
Miss. Code Ann. § 71-3-71 (Rev. 2000).
29
Miss. Code Ann. § 83-23-123(1) (Rev. 1999).
11
cost-reduction provision of the workers’ comp subrogation statute, Blakeney advanced no
theory or argument that she was entitled to recover her attorney fees.
¶29.
The determination of this issue rests on MIGA’s authority for the credit. When it
takes credit under Section 83-23-123(1), it is not, as we have said, subject to the provisions
of Section 71-3-71, including its cost-reduction provision. In this case, Section 83-23-123(1)
controls, and we find no authority for the Commission’s reduction of costs.
CONCLUSION
¶30.
MIGA is entitled to a $70,000 reduction in the amount it is obligated under the MIGA
Act to pay on Blakeney’s claim. We therefore reverse the decisions of the Court of Appeals
and the trial court, and render judgement for MIGA.
¶31.
REVERSED AND RENDERED.
CARLSON, P.J., RANDOLPH, LAMAR AND CHANDLER, JJ., CONCUR.
WALLER, C.J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY
GRAVES, P.J., KITCHENS AND PIERCE, JJ.,
WALLER, CHIEF JUSTICE, DISSENTING:
¶32.
Before applying MIGA’s exhaustion provision, the Court should determine whether
Blakeney’s claim for UM benefits is also a “covered claim.” Blakeney’s claim for UM
benefits differs from her MIGA-assumed claim for workers’ compensation benefits. Because
her UM-benefit claim is not also covered claim, the MIGA Act does not require a reduction.
Therefore, I respectfully dissent.
¶33.
The MIGA Act’s exhaustion provision must be read in conjunction with Mississippi
Code Section 83-23-109(f), which defines “covered claim.” Miss. Code Ann. § 83-23-109(f)
(Rev. 1999); Miss. Code Ann. § 83-23-123(1) (Rev. 2009). Section 83-23-109(f) explains
12
that a covered claim is “an unpaid claim, . . . which arises out of and is within the coverage
. . . of the applicable limits of an insurance policy . . . issued by an insurer, if such insurer
becomes an insolvent insurer. . . .” Miss. Code Ann. § 83-23-109(f) (emphasis added). The
relevant MIGA statutes and this Court’s opinion in Leitch v. Mississippi Insurance
Guaranty Association, 27 So. 3d 396, 400 (Miss. 2010) do not state that a party’s claim
against a solvent insurer becomes a covered claim subject to MIGA’s exhaustion provision
simply because both claims originated from the same injurious event. See Maj. Op. ¶ 13
(“Blakeney had a claim against her employer’s solvent UM carrier for the same loss[,] the
damages she suffered from the automobile accident[,] being paid by MIGA.”).
¶34.
MIGA may reduce its obligation to pay when a party collects benefits on a claim that
is also a covered claim. See Miss. Code Ann. § 83-23-123(1) (Rev. 1999). A covered claim
is a claim that “arises” from an insolvent insurer’s coverage. Miss. Code Ann. § 83-23109(f) (Rev. 1999). In other words, when the insured recovers on a claim that is the same
type of claim assumed by MIGA, MIGA must reduce its payment by the amount of that
recovery. Thus, the exhaustion provision prevents duplicate recovery for identical claims.
¶35.
The Court explained this concept in Leitch. After an automobile accident, Leitch filed
suit against Reliance, the negligent driver’s insurance company. Leitch, 27 So. 2d at 397.
After Reliance later was declared insolvent and MIGA assumed its obligations, Leitch joined
in the suit State Farm, his own insurance company, which initiated the UM coverage on his
policy. See id. See also Leitch v. Miss. Ins. Guar. Ass’n, 27 So. 3d 405, 409 (Miss. Ct.
App. 2010). Eventually, State Farm, the solvent company, settled with Leitch, and MIGA
13
attempted to reduce its obligation to Leitch by the settlement amount. Leitch, 27 So. 3d at
398. This Court determined that Leitch’s claim against State Farm (the solvent insurer) was
the same as the covered claim he had against MIGA. Id. at 400. Because Leitch would have
recovered twice on the same type of claim, MIGA could reduce its obligation by the amount
of Leitch’s recovery under the State Farm policy. See id. In other words, Leitch did not
authorize MIGA automatically to reduce its obligation when the insured had received UM
benefits. See id. at 401.
¶36.
Here, Blakeney’s claim against Coregis and Progressive is wholly unrelated to her
covered claim, which precludes application of the exhaustion provision. See Miss. Code
Ann. § 83-23-123(1) (Rev. 2009); Leitch, 27 So. 3d at 400. Blakeney’s claim against
Coregis and Progressive involved UM benefits, while her claim against MIGA involved
workers’ compensation benefits. Because her claim for UM benefits is not the same as her
covered claim for workers’ compensation benefits, MIGA cannot suspend its obligation to
pay. See Leitch, 27 So. 3d at 400. Further, unlike Leitch’s claim, Blakeney’s claim for UM
benefits from the solvent insurance companies did not arise from another insurer’s
insolvency.
¶37.
In sum, under the MIGA statutes and Leitch, Blakeney’s claim against Coregis and
Progressive for UM benefits is not the same as her covered claim for workers’ compensation
benefits. Any amount payable by MIGA on her covered claim for workers’ compensation
benefits cannot be reduced by her recovery from Coregis and Progressive. Because the
exhaustion provision does not apply, MIGA must pay Blakeney’s claim pursuant to
14
Mississippi Code Section 83-23-115(1)(a)(i), which provides that MIGA shall satisfy its
obligation to a claimant by paying “[t]he full amount of a covered claim for benefits under
a workers’ compensation insurance coverage. . . .” Miss. Code Ann. § 83-23-115(1)(a)(i)
(Rev. 2009).
¶38.
Therefore, I would hold that MIGA is not entitled to a $70,000 reduction in the
amount it is obligated to pay on Blakeney’s claim.
GRAVES, P.J., KITCHENS AND PIERCE, JJ., JOIN THIS OPINION.
15
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